If a resident company derives income from more than one foreign country, proportionate foreign tax credit is allowed against income from each country. The credit is calculated as below:

(A x B)/ C

Where:

A = Total Afghan income tax (before any credit)

B = Net taxable income from a foreign country

C = Total taxable income from all countries (including Afghanistan)

Any foreign taxes paid for that country, in excess of the above cannot be claimed as a credit. Such excess credit is also not eligible for carry forward or carry back to offset or reduce Afghan income taxes in subsequent or prior years.

Below is a summary of the available methods for various income tax streams based on domestic law.

Royalty Copyright	OC
Capital Gains	OC
Dividends	OC
Interest	OC
Royalty Patent	OC
Sales	OC
Service Management	OC
Service Technical	OC
Royalty Trademark	OC

The credit column shows the type of foreign tax credit granted when the receiving country receives a payment. Four abbreviations are used for the type of foreign tax credit available:

NC means no credit but foreign withholding taxes can be deducted.
OC means ordinary credit, i.e., credit for foreign withholding taxes (e.g., withholding taxes).
IC means indirect credit, i.e., credit for underlying corporate taxes as well as foreign withholding taxes.
ND means no credit and no deduction for any foreign withholding taxes incurred.

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